Abstract for: Logical vs Historical Time in A Price Adjustment Mechanism
Recent global financial crisis seems to be re-kindling the battle of economic thoughts which has been dominated by the neoclassical doctrine as free market fundamentalism. This paper first examines the neoclassical foundation of price adjustment mechanism built on logical time, using system dynamics modeling. Then it is argued that similar workings could be done in a real market economy running on historical time by the interplay of price, inventory and their interdependent feedback relations. This implies that off-equilibrium analysis built on historical time without neoclassical concept of auctioneer is a better way of representing market activities. This approach can be made possible by system dynamics modeling.